Stock Analysis

Investors in Altria Group (NYSE:MO) have unfortunately lost 7.2% over the last five years

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NYSE:MO
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The main aim of stock picking is to find the market-beating stocks. But in any portfolio, there will be mixed results between individual stocks. So we wouldn't blame long term Altria Group, Inc. (NYSE:MO) shareholders for doubting their decision to hold, with the stock down 34% over a half decade. Even worse, it's down 9.2% in about a month, which isn't fun at all. We do note, however, that the broader market is down 9.6% in that period, and this may have weighed on the share price.

So let's have a look and see if the longer term performance of the company has been in line with the underlying business' progress.

Before we look at the performance, you might like to know that our analysis indicates that MO is potentially undervalued!

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

During the five years over which the share price declined, Altria Group's earnings per share (EPS) dropped by 34% each year. This fall in the EPS is worse than the 8% compound annual share price fall. So the market may previously have expected a drop, or else it expects the situation will improve.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

earnings-per-share-growth
NYSE:MO Earnings Per Share Growth September 26th 2022

This free interactive report on Altria Group's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, Altria Group's TSR for the last 5 years was -7.2%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

While it's never nice to take a loss, Altria Group shareholders can take comfort that , including dividends,their trailing twelve month loss of 7.1% wasn't as bad as the market loss of around 22%. Given the total loss of 1.4% per year over five years, it seems returns have deteriorated in the last twelve months. Whilst Baron Rothschild does tell the investor "buy when there's blood in the streets, even if the blood is your own", buyers would need to examine the data carefully to be comfortable that the business itself is sound. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For instance, we've identified 3 warning signs for Altria Group that you should be aware of.

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

Valuation is complex, but we're helping make it simple.

Find out whether Altria Group is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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About NYSE:MO

Altria Group

Altria Group, Inc., through its subsidiaries, manufactures and sells smokeable and oral tobacco products in the United States.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation3
Future Growth2
Past Performance4
Financial Health2
Dividends5

Read more about these checks in the individual report sections or in our analysis model.

Established dividend payer with proven track record.